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Fixed for me as well by opting into BETA.
Hope this gets fixed soon.
EDIT 2: Confirmed that Beta channel has fixed the issue, have notified Steam support. If you try to leave the BETA channel the icons will go back to small.
DOESN'T WORK: [Mine was doing this too, you do NOT need to opt into the BETA channel to fix this, you simply need to refresh Steam's config files.
https://support.steampowered.com/kb_article.php?ref=3134-TIAL-4638]
This - was happening for 2 weeks for me as well. Came looking for a thread like this, found it - read the last post, closed and reopened Steam.. Fixed.